BlackRock strategist sees equities possibly shedding up to 7% of value; 'a guessing game'
How bad might the current stock market sell-off get?
Maybe a 5% to 7% decline, if market trends from the past few years continue and fundamentals hold, BlackRock Inc. chief equity strategist Bob Doll wrote in a commentary released today.
“Since the current bull market began in early 2009, we have seen many short-term corrections of around 5% to 7% that have occurred without any serious worsening of fundamentals, so that range represents a possible starting point for any sort of near-term correction," Mr. Doll wrote, noting that any such prediction is “always a guessing game.”
BlackRock has been warning for several months that the market was due for some sort of correction, he said.
Since the near-term high from last Monday, the S&P 500 index has fallen about 3%.
The disappointing labor market report for March, released Friday when markets were closed, could spill over to the market this week, Mr. Doll wrote.
Rising concern over the European debt crisis, a hard landing in China and the unlikely prospect of more stimulus coming from the Federal Reserve have been blamed for recent selling, he said.
"None of these developments, however, represent any sort of significant change in economic or market fundamentals," Mr. Doll wrote.
But the jobs report serves "as a reminder that the United States is not about to transform into any sort of robust growth engine," particularly with growth in most of the world slowing, he added.
BlackRock predicts growth in the U.S. this year at 2% to 2.5%.